A Customer Relationship Management (CRM) application is traditionally an enterprise-wide application that allows companies to manage aspects of their relationship with their customers. Typically, a CRM application provides business processes that operate on business entities.
Examples of business entities include a lead or an account. Business entities typically have many attributes that describe their state.
A business process operates across one or more business entities. A set of available business processes defines the possible entity states and state transitions. An example of a business process is lead conversion: the process of turning leads into accounts.
A CRM application is typically specialized for a particular industry to deal with the business problems of a specific field. There are many business fields in which different vertical CRM applications have been specialized, such as aerospace, automotive, communications, finance, insurance, manufacture, consumer goods/retail, energy/oil gas chemical, health care/clinical/medical/pharmaceutical and travel/transportation/hospitality, etc.
An industry-specific CRM application can be referred to as a vertical CRM application. Vertical CRM applications contain specialized business entities and processes designed to deal with the specific problems of the specific industries. For instance, an automotive CRM application might contain a “schedule maintenance” process for “vehicles”, which is specific for the automotive industry but may not applicable to other industries.
A CRM application deployed for a specific company may need further customization. For example, the owner of a particular automotive dealership might refer to its accounts as “clients” and require that vice president be always notified of new accounts in a business process.
Thus, a typically enterprise CRM application is tailored for a specific industry and for a specific company in the industry.
The need for highly tailored applications presents certain difficulties. For example, a highly tailored application may manage additional information about the processes and entities that are specific to a company. The additional information specific to the company is only valuable to the company requiring the tailoring but not to other companies.
Thus, highly tailored applications can be expensive. Since handling additional information generally requires additional resources either in memory or processing, highly tailored applications typically cost more to run than their untailored counterparts. Furthermore, the additional cost may have value only for a small set of companies. Other companies may not see the value, or see the tailoring as having negative value.
An enterprise CRM application is typically installed at a location specific to the company and tailored for the company. The company that sees the value of the customization typically pays for the additional cost of tailoring. If the customization is sufficiently valuable, the company with sufficient resources may undertake the tailoring.
A CRM application can also be installed at a host company, which provides access to the CRM application to different customers. Hosting is desirable from the point of view of some customer companies, because it allows the customer company to focus on its core business and the hosting company to specialize in hosting CRM application.